Responsible investors should be occupying Wall Street!

Long-term, strategic economic thinking is required; in short, responsible investment.

It would be easy to be cynical at the Occupy Wall Street movement, which this weekend branched out into the capitals – and financial powerhouses – of most major countries. The goals of the protesters can appear vague or utopian, and open to dismissal as fantasy economics. But it is impressive to see a movement inspiring people of a broad demographic to take to the streets simultaneously across the globe free of any co-ordinating body bar the internet. The ‘branding’ (for want of a better word) of ‘Occupy’ has resonance. Many in society want to reoccupy a social space that has been taken over by finance. In a nutshell, if there is mind-boggling amounts of public money available to save the financial system (a necessary act), where is the accountability for how the money was spent and what society can expect in terms of ‘return’ to satisfy its basic needs: jobs, housing, infrastructure and welfare? Instead of our daily dose of political debt doom, where are the real partnership stories of finance working with society for long-term sustainable economic prosperity? Al Gore aptly describes the Wall Street protests as a “primal scream of democracy”. If economic decisions are not taken in the broad social interest then how long before democracy and an already fragile social fabric is itself threatened? Investors should be worried. As Mohamed El-Erian, Chief Executive of Pimco, the world’s biggest bond manager, portends in an article for the Huffington Post, things could get a whole lot worse: “At home, our elected representatives seem incapable as a group to respond properly to severe economic and social challenges. Continuous (and increasingly nasty)political bickering undermines the required trio of common purpose, joint vision, and acceptance of shared short-term sacrifices for generalized long-term benefits. Internationally, Europe’s deepening debt crisis amplifies headwinds undermining an already sluggish American economy that, in the absence of better policy responses, is on the brink of another recession, Should the economy slip from treading to taking on water, the social implications would be profound given that we already have high unemployment, a large fiscal deficit and, with policy interest rates already floored at zero, little policy flexibility.” Link
The answers to these problems are hugely complicated. But responsible investors have ‘long-term’ interests front and centre in their thinking on investment. They could step forward to provide some economic ballast to the Occupy movement; to start outlining where finance can meet broader social aspiration, especially, if, as I suspect it might, this movement starts to play into mainstream politics in election years in countries such as the US and France. Some already are. A bold statement from SRI house, Zevin Asset Management, declares its support for Occupy Wall Street: “The rising differential between executive and worker incomes and the disregard exhibited by many corporations for their local communities and the environment are symptoms of a financial system which rewards short-term destructive gambling instead of focusing on the long-term sustainability of our economy. As socially responsible investors, we seek the same goals as those protesting.” We need to see more of this kind of backing.